That clip from the Toy with Richard Pryor had me laughing...good one Mulka.

Mole...I also had to laugh at your Monty Python post..."bring out your dead"...lol

Cramer on CNBC says market may go to DOW 8,000...seems like everyone is a bear now...interesting.

Seems like there is a definite whiff of panic in the air, which is usually a good sign of a market bottom, at least in the short term here.

http://www.cnbc.com/id/26906947

There is a different between a 'market bottom' and a 'market low' - the latter at least in the short term I consider a possibility.

Evil astrologer Arch Crawford issues alert for Monday(9/29)!


CRAWFORD PERSPECTIVES

CONSULTING CLIENTS 080926

WHAT WE WANT TO KNOW IS:

HOW MUCH IS OUR GOVT SPENDING TO SUPPORT THE STOCK MARKET?!

AS LONG AS WE ARE EVALUATING GOVERNMENT BAILOUT COSTS

WITH THESE HEADLINE NEWS ITEMS, HISTORY MANDATES THAT THE 2002 LOWS WOULD HAVE ALREADY FALLEN!!

THAT’S DJIA=7200, AND S&P500=760

TODAY DJIA +138 NYSE -40 = TOTALLY FAKE RALLY!

ASTROLOGY VERY BAD ON MONDAY OPEN!!!

OPINION = RECENT LOWS WILL BREAK

AND SERIOUS WAVE 3 DECLINE TAKES HOLD

LOOK THEN FOR 2002-2003 LOWS TO BE TESTED!”

GOLD MAKES ANOTHER RECORD SPIKE UP!

UP OVER +$38 AND LOSES THE ENTIRE GAIN



WE ARE STILL IN WORSENING FINANCIAL CRISIS!



Remember that markets CAN DO ANYTHING, and keep protective Stops on ALL positions.



Arch Crawford

Crawford Perspectives
520-577-1158
www.CrawfordPerspectives.com

"GOLD MAKES ANOTHER RECORD SPIKE UP!

UP OVER +$38 AND LOSES THE ENTIRE GAIN"

I hate this upper case business - sheeesssh. But anyway - he's spot on with Gold. Remember, I mentioned the same for the last few days. Ignore both of us at your peril.

Just wanted to take a minute and let you know that I'm enjoying the intra-day updates. I used to check in in the evenings or early mornings, but I guess now I'll have to alternate between here and SOH during the day. Thanks!

Hey, thanks BigSteve - we try to make you guys come back for more ;-)

Because I was too busy mucking around with my failed SPY puts, I missed what appears (now) an obvious trigger to go long on the one issue I watch more than any other: IWM. I have a 23.6% retracement at 68.40 based on a fib from a 1-yr chart, but a confluence of 23.6 from a 10-yr chart and 38.2% retracements from the aforementioned 1-yr chart at about the 71.40 level...and for awhile the 71.40-50 level has been huge (it also formed the neckline of a beautiful H&S pattern that formed back in May/Jun). So it wouldn't shock me to see a bounce off of that resistance level.

Don't feel bad - any trade at this time is a bit of a lottery ticket.

We've Only Just Begun
Steve Keen, Sept. 19 2008

I've had a couple of very enjoyable chats this week with Red Simon, on the ABC Breakfast Show in Melbourne, Australia, and some friends have been trying to get me to throw some old Skyhooks song lines into the conversation--such as "Horror Movie" and the like (for non-Australian and/or non-"Living in the Seventies" readers, Red was the drummer and lyricist; here is a link for the lyrics).

Though they're definitely apt, the piece of 70's music that most came to mind when I spotted this new feature on the US Federal Reserve's website this morning was from The Carpenters (which in contrast to The Skyhooks, was not one of my favourite bands): "We've only just begun".

It's an interactive map of the subprime and alt-A mortgage catastrophe in the United States. The numbers, which are also available for download as Excel spreadsheets, are simply staggering.

The scariest part of the data relates to what are known as ARMs ("Adjustable Rate Mortgages")--fixed rate mortgages that began with a "teaser" low rate, and then reset after a number of years to a higher rate (the standard US mortgage is a fixed rater, unlike Australia where variable rate mortgages are the norm).

Of the almost 3 million subprime loans (the precise number is 2,919,604, representing 2.5% of America's 115,904,641 housing units), almost 2/3rds are ARMs (the national average is 62.9%), and just over 30% of them will reset to the higher rate in the next 12 months (with another 10% to follow over the next two years).

That's why this crisis has "only just begun". There are two sides to this catastrophe, and whatever is done about it, one side or the other is bankrupt.

IF the ARMs go ahead, then the number of American households that will go bankrupt is at the minimum 1 million--because there's no way these borrowers can pay the higher rate. At the simplest scale, this is because the rates will rise from an already high average rate of 8.8% to a usurious 14.8%. But on top of this, the effective rate for the loans throughout has been the higher rate--and the gap between this and the initial teaser rate was capitalised onto the debt.

So a borrower who took out a loan in 2006 of $183,900 (the average subprime loan size--note by the way how small this is compared to median Australian housing loans), and whose loan resets to the higher rate next year, will go from paying 8.8% on 183,900 to paying 14.8% on $219,200--a doubling of annual interest payment commitments, from $16,180 to $32,440.

This for a cohort of borrowers who are already massively behind on their payments--though not as massive as it will get (currently 10% are behind 30-60 days, 5% 60-90 days, 10% 90 days plus, and 11% are in foreclosure). There's no way they can manage this: they are, as the Americans put it, "toast".

But what if they are freed from this obviously onerous burden by legislative fiat? Then the people and institutions who bought the residential mortgage-backed securities (RMBSs) that these mortgages finance are "toast": the bonds will be next to worthless.

So We've Only Just Begun. And it is a Horror Movie, though not "right there on your TV"--if you're American, you're living in it.

And if you're not American, then it's still almost guaranteed that some of your investments will suffer--whether indirectly if you own shares or property, or directly if you or an agency that affects you purchased the RMBSs that funded the subprime scam. You may well wish that you were still "Living in the Seventies".

Marc Faber Says U.S. Credit Losses May Total $5 Trillion. I couldn't get the sound to play on my Mac. Had to use Windows..

http://www.bloomberg.com/avp/avp.htm?N=av&...17...

BTW, I don't know if you guys ever ran across my little tidbit about how much a trillion actually is. Imagine you have an unlimited amount of $1000 bills (yes, they exist: http://www.dreckless.com/images/1000%20dollar%2...). Now keep stacking one on top of the other until you reach a stack 4 inches high. Congratulations - you're a millionaire!

$1 Trillion Dollars would be a stack of $1000 bills 87 MILES high - it would basically reach lower orbit in space. Simmer on that for a while and remember it next time pundits keep throwing talking about various trillions to be spent on corporate bailouts.

So, if you do the math those credit losses of $5 Trillion represent a stack of $1000 bills 435 miles high. If you prefer $100 bills its 4,350 miles - Los Angeles to New York City, and not next to each other but stacked on TOP of each other. You could basically stack $1000 bills from Los Angeles all the way to Sacramento and then some. The point I'm trying to make is that this amount of money simply boggles the mind, and the people making decisions on all this have no concept about what a Trillion really represents.

Can you please REPEAT AFTER ME : "Mercury Retrograde!" :))
http://yorba.tv/archive-2008-09-89-4-start.htm

>its 4,350 miles - Los Angeles to New York City


Maybe in your America, but not in ours

I drove from DC to LA, and I know distance between DC and NY :p
Straight line 2443.79mi LA-NYC

Google driving : 2792mi

http://maps.google.com/maps?f=d&saddr=los+angel...

Great - so it's almost NYC-L.A. and BACK! That is simply an insane amount of money.

BTW, you're a pedant :-P

"It is a disgrace that no professional economist was consulted by Congress or invited to present his/her views at the Congressional hearings on the Treasury rescue plan."--Nouriel Roubini

Great article and exactly what Tim was saying. It doesn't matter what they come up with. It will not stop the bear.

Well, here's what my trading day went like...

http://www.youtube.com/watch?v=cOKJW6gFydw&fmt=18

Bought puts on SPY for a quick day trade. I would like to add that I am an asshole. I put these trades on from work. Bad idea. Never again. Fortunately it wasn't too costly, but my account is small and I can't afford this Mickey Mouse shit. I HAD a proven track record of day trading on paper awhile ago, but once again, when I go with real money, something in the formula changes. But GM met my trigger to go bullish so I sold some Oct 9 puts. And if it gets put to me I won't really care...I'll just write covered calls on it.
Go ahead...call me a put selling covered call writing pussy. I don't care. It's the only thing that has made me money for real. I just have day trader in my blood and I'll get there sooner or later. But at least I'll never give up!

"Go ahead...call me a put selling covered call writing pussy. "

You're a put selling covered call writing pussy, Ukla!

Allow me to reiterate: "I don't care."

I guess that was just a little too easy...if not a little unimaginative. Sucka!

+1

Mole
We can still buy puts on the financials if we sell to close?

Absolutely yes.

I may be wrong, but I have a feeling the "bailout" has just been priced into the market.

BTW, gagelle - I see you post here a lot and I wanted to say thanks for your continued support.

1+

No problem. I really enjoy the blog.

Going along with the baldies--I don't know--remember what happened to Samson?

"Samson was born to aged parents. He was a Nazirite set apart for God's service and therefore did not cut his hair or drink alcohol. His exploits included tearing a lion apart with his bare hands, killing a company of the men of Ashdod, setting fire to their fields and orchards, and slaughtering a thousand men with the jawbone of an ass. After a Philistine woman named Delilah enticed Samson to reveal the secret of his great strength, she cut off his hair, and the Philistines gouged out his eyes, bound him with strong fetters, and set him to grind at the mill in the prison. But Samson's hair, the secret of his strength, began to grow again. The day came when the Philistine lords sent for the blind Samson to laugh at him. Samson felt for the pillars on which the house rested, pulled them down, and died along with many Philistines. "

Jeeez - for one weekend, Gagelle. We're as bearish as ever but couldn't pass up the possibility of some easy money. Again, our exposure is very small - only a handful of contracts.

I was just kidding. I'm one of the biggest supporters of the bald community. Ask Larry David.

http://www.metacafe.com/watch/1432800/larry_dav...

Good clip! If I may say so myself :-)

So did I. The bald one must be pushed higher - to fall harder.

I'm concerned this might be a buy on the rumor, sell on the news type situation. No one with any brain cells should be holding on to stocks for the long-term. Everything is bailout this and sector rotation that. Who knows though, could be a big pop Monday. Seems like a big gamble though. So I'm staying mostly in cash, with some PWE (dividend and commodity and Canadian dollar play), DBA, and UNG. The only thing certain is the death of the dollar.

I'm 95% in cash ;-) Very small positions, as I said.

While definitely a good defensive strategy (the near all cash), I believe (and let me know what you think of it), that short exposure (although painful in the last couple of Fridays) needs to be in place.

Was it here in the last few weeks that it was mentioned that if 'the big move into the abyss begins, there may be no good short entry opportunities for at least a few 300-400 point days in a row' (I am paraphrasing from what I remember). Not to mention the increase in the option premiums (if you are inclined that way) as the VIX goes higher. Of course any intervention (not that there should be too many left; rate cut?) can really screw your account up in the short run.

Observation/question: I haven't seen much talk about home builders lately as the focus is on financials. New home sales, jobless claims, tightening of lending, no money to lend, yet, while $SPX is around its July low, XHB is 50% above the July low and last Friday it had a new 52w high. Something wrong with this picture/relationship?

Are you going long on this @ the Support level as I dont understand your remarks below the graph. Please clarify.

We grabbed them just now.